Using The Blockchain To Fight Mobile Payment Problems
Out of the mobile payment trends that we’re bound to witness in the immediate future, there is one trend that offers an almost endless amount of possibilities for an industry that it’s expected to triple. And, that’s the blockchain.
Despite the growth and benefits that mobile payments provide, there are still a handful of problems that need to be addressed before mobile payments are embraced by everyone.
By using blockchain technology, mobile payments will be become even more powerful and effective for global users since it will resolve the following problems.
“Mobile payments are a booming business with hundreds of companies spending millions of dollars to fight each other,” BitPay CEO Tony Gallippi told CoinDesk. “But every mobile payment company has the same two problems.”
The first problem, according to Gallippi, is that mobile payment companies “are all walled gardens, and users cannot transact outside the walls.”
If you’ve transferred funds in the past overseas, then you’re already familiar with how cumbersome of task this can be. And, it can be even worse if you’re working with a payment system infrastructure that underdeveloped, which could hold up payments for days.
Instead of relying on outdated methods that route payments through a twisted trail of banks and clearing houses, the blockchain could be used to make transactions occur immediately thanks to using a piece of code that runs over the internet.
The other problem that Gallippi expressed with mobile payments is traveling. “I can have 10 mobile payment apps on the phone, but if I go to Europe, not a single one of them will do me any good.”
For travelers this is a big issue surrounding mobile payments. If they had one mobile payment app that could work anywhere in the world, it would save them from expensive transactions fees and the headache transferring funds into local currencies.
What’s been the main problem holding mobile payments back?
While mobile payment companies are enhancing their security features, such as Apple Pay’s fingerprint sensor identity sensor Touch ID, there are still holes in the current security infrastructure.
With blockchain technology, such as tokenization, vital payment information like your credit card number will no longer be required whenever making purchases or transferring funds. Instead, you would use a set of unique identification symbols that would be transmitted over the cloud.
Furthermore, each transaction is recorded in a public ledger and once a coin is used it can not be used again.
Removing Third Parties
Mobile payments currently require a lot of support, which means that there are lots of parties involved. Take Suretap, for example. It’s a mobile wallet in Canada that works with most of the leading banks. However, it’s not available on all mobile carriers and devices, such as the iPhone. This severely limits the usage of mobile payments for users.
The blockchain, however, is decentralized and removes the middleman. Transactions are made directly between two parties since it uses distributed architecture and encryption to authorize transactions.
Without the interference of third parties, mobile payments will become cheaper, faster, more efficient, and available to all smartphone users in the world – even those who are unbanked.
Convenience of Transactions
Without restrictions and regulations from third parties, the blockchain is making transactions more convenient for users. Take Kenya, for example. The country happens to be the world leader in digital and mobile money. In fact, according to Pantera Capital founder and CEO Dan Morehead, “Over 75 percent of the adults in Kenya use a digital currency called M-Pesa, and over half of the GDP of the entire economy is operated over this digital currency.”
When coins are accepted from anywhere in the world, and are able to be converted to a local currency, mobile users can completely bypass traditional banking and financial institutions. As mentioned earlier, this speeds up transactions and avoids expensive fees.
It also gives the millions of unbanked individuals in the world the chance to participate in global commerce or lend money to friends or family instantly with just a tap of button.
As JP Buntinx says in The Merkle, “One thing consumers all over the world are craving for is transparent loyalty programs, allowing them to check their balances at any given time, without too much hassle.” Mobile payments platforms are improving in this area as well by offering rewards whenever a customer uses an app to make a purchase.
But, blockchain technology could improve loyalty rewards significantly.
Boloro and Ribbit.me announced a partnership in December 2015 that would give brands the opportunity to customize loyalty programs just for their brand. As opposed to a one-size-fits-all-approach, this brands could create coupons, promotions, or offers that apply specifically to their customers.
Customers could use rewards at different retailers and transfer points to their friends or family, instead of being limited keeping points to themselves at just the issuing retailer.